Gold hits 2-year low as the dollar falls from a record high

• The dollar has risen sharply due to recession worries.

• Since its 2020 high, gold's price has dropped by 20%.

After the dollar achieved a new record high, it began to decline, which led to a rise in gold prices from their lowest point in almost two years.

On Tuesday, the dollar's upward momentum slowed, which was good news for the interest-free commodity. In times of economic turbulence, gold is a haven, but central banks' recent monetary tightening has boosted the dollar.

The dollar's weakness may persist if other major currencies, like the pound and the yen, decline in value. Energy and material commodity markets have also been hammered hard, with the Bloomberg Commodity Spot Index falling to its lowest since February.

According to Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services, "the focus is still on dollar strength and it could continue to weigh on the precious metal." He said that he anticipates bullion to travel toward $1,550 per ounce in the following weeks as sentiment remains quite damaging because "further rate hikes to contain inflation will weaken gold's safe-haven position."

US inflation statistics and public speaking appearances by Fed officials like Vice Chair Lael Brainard and New York Fed President John Williams might inject more volatility into the market this week.

In a bear market, which began following gold's 20% drop from its 2020 high, gold has been trading below its intrinsic value. Since the metal is valued in US dollars, its value tends to fluctuate inversely with the dollar and interest rates.

At 12:34 PM SGT, spot gold prices increased by 0.6%, to $1,631.27 per ounce. Following a 1% increase on Monday, the Bloomberg Dollar Spot Index dropped by 0.3%. All three precious metals, silver, platinum, and palladium, increased in value.